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A new report from PricewaterhouseCoopers (PwC), titled Future of India - The Winning Leap, calls for a departure from the "business-as-usual" mindset for India's growth. To create a $10-trillion economy over the coming two decades, the report proposes a series of innovative solutions in 10 critical sectors. At the launch of the report, Dennis Nally, chairman, PricewaterhouseCoopers International, spoke to Ishan Bakshi on the Indian economy. Edited excerpts:
Has the perception about India changed among foreign investors after the general elections?
I think the perception has changed dramatically: It's very upbeat, very positive. The message the new government has given to the international community has been positive. It's early days, obviously but, for example, the recent agreement the US and India reached was huge. I was at a meeting in Washington last week and this was the focal point of what people were talking about. There is a clear indication that there is willingness to move forward and take some of the things the prime minister (Narendra Modi) has talked about and get them done.
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We've identified 10 sectors in the report. The ones they, I think, boil down to are health care, education, financial services and infrastructure.
The health sector is significant, as it has to provide quality health care to over a billion people. A lot of transformation has to take place within that sector. Technology has a big role to play in that process. If the population dividend that everyone talks about is going to be realised here, how the education sector thinks about new ways to skill individuals with the right competencies to be really productive over the next 20 years is going to be really critical.
Financial services are a must for driving this economy. Opening that up and getting more competition is important. Providing market services to the population is absolutely critical. Last, infrastructure has to be a big component of the story here over the next several years to drive this growth agenda. Underpinning all of that is a focus on technology whether it's research and development or whether it's how to figure out new ways to deliver health care with technology. That to me will be the real differentiator in terms of how to realise the potential of this economy.
Do you think the manufacturing sector will be able to absorb the millions of semi-skilled labourers currently employed in the agricultural sector?
I don't see it that way. Is the model that has been used elsewhere the right model for India? I think it is instructive to think about it but the whole idea is you will use much more technology, much more innovation to drive the manufacturing sector, is going to be a big part of it. The labour component is interesting but that's not the real competitive advantage in my mind.
For example, who would have thought in the US that companies would be bringing manufacturing back from offshore into the States? That's because of technology, innovation and new ways of doing things and that's got to be the mindset that should be imbedded in the manufacturing sector in India.
So, it's going to be difficult to create millions of low semi-skilled jobs.
It's going to be tricky and it's going to be dependent on the ability to skill up people - that is much more a skilled labour kind of approach versus a low labour (cost-wise) kind of approach. The other factor that needs to be contemplated is if you think about the global supply chains today, the model is very different from what it was five to eight years ago.
So, the ability to have capabilities that will allow India to play into the global supply chain is going to be very important. It's a different way to think about where the opportunities are. I think it's very achievable, but it means, let's not go to the models that have been used in the past, let's think of a new model that fits the purpose for the next 10-15 years.
